Drive for biofuels could send food prices soaring

AFP , MANILA AND TOKYO

A global shift toward renewable energy could jack up food prices by up to 80 percent as crops and farmland are diverted to producing biofuels, an international agricultural think tank warned yesterday.

Joachim von Braun, director-general of the International Food Policy Research Institute, said further crop yield improvements and increased efficiency of these alternative fuels were required if a global price shock were to be avoided.

Unless governments invest to improve farm productivity "so that we can cope with the increased demand for biofuels, the [food] prices may come up between 40 and 80 percent on top of what you can see," he told reporters on the sidelines of an agriculture and poverty conference in Manila.

"If it's well managed and we have more investment in research and technology to bring up yield levels in the crops and improve the efficiency of biofuels, these price effects may only be between 5 and 15 percent. So it depends on government policy," he said.

Von Braun said that "globally, many countries have plans to scale up biofuel production in the order of covering 10, 20 percent of their transport fuel," chiefly ethanol and biodiesel.

Brazil has committed to 25 percent while Europe plans to use biofuels for 10 percent of the countries' needs by 2020, he said.

In Asia, he said the picture was mixed, which China having announced plans to shut down some of its ethanol plants "because of the concern for using too much grain for them."

On the other hand, India has moved rapidly into ethanol production, Japan wants to import more biomass and Malaysia and Indonesia both want to be major suppliers of biodiesels based on palm oil.

"So there is a general idea that this is an important market. It will be partly driven not only from the energy market side but from the global demand for renewable energy," he said.

He said that crops which are "fundamental for the livestock industry are being affected and clearly we will see a lot of correlation in the price movement in the energy market and in the food market."

Meanwhile, Japan is studying how to turn inedible crops such as straw into biofuel to run cars.

Ethanol is derived from sugar beets, wheat, corn or sugarcane, leading to concern that reliance on it will push up food prices.

Japan's Ministry of Agriculture, Forestry and Fisheries will seek a budget of several million dollars to demonstrate that biofuel can be made from rice straw and chaff, said Eiichiro Kitamura, the official in charge of the project.

"We already have the technology to make ethanol from straw and chaff, but we've only succeeded at the laboratory level," he said.

"What we are trying to do is to collect straw and chaff on a relatively large scale in a local community to make biofuel and then use it for the first time for vehicles and other uses," he said.

"If we can use biofuels from inedible parts of crops, then markets for biofuels and markets for foods would not have to compete," he said.

The budget request will be submitted to the Ministry of Finance for the next fiscal year, and the final budget plan will have to be approved by parliament.